Incident description Pubang Garden released the company's 2015 annual report. During the reporting period, it achieved operating income of 2,433 billion yuan, a year-on-year decrease of 23.04%, gross profit margin of 20.84%, a year-on-year decrease of 5.29%, and net profit attributable to owners of the parent company of 199 million yuan, a year-on-year decrease of 49.88%, and EPS of 0.12 yuan. Among them, the fourth quarter achieved operating income of 660 million yuan, a year-on-year decrease of 28.34%, a gross profit margin of 13.24%, a year-on-year decrease of 17.73%, net profit attributable to owners of the parent company of 013 million yuan, a year-on-year decrease of 90.64%, EPS of 0.01 yuan in the fourth quarter, and 0.03 yuan EPS in the third quarter. Incident review The main business and gross margin both declined, leading to a decline in profit: Affected by external factors such as downward pressure on the economy, fluctuations in the real estate market, and local government debt regulation, the total number of new orders signed by the company decreased, and revenue fell 23.04% year-on-year. In terms of profitability, due to increased competition in the real estate and garden market, the gross margin of the engineering business, which accounts for a high share of revenue, declined markedly, resulting in a 5.29 percentage point decline in overall gross margin. In terms of expenses, sales expenses are due to the consolidated sales expenses of Deep Blue Environmental Protection. Management expenses were reduced by 17 million dollars due to reduced employee remuneration and share payment expenses. Asset impairment losses increased by $16 million compared to last year, and combined investment income increased by $16 million, resulting in final net profit of 199 million yuan, a decrease of 49.88% over the previous year. The company's main revenue for the fourth quarter was 660 million yuan, a year-on-year decrease of 28.34%, gross margin seriously declined, a decrease of 17.73 percentage points, and imputed net profit of 13 million yuan, a year-on-year decrease of 90.64%. Real estate is picking up, and the main garden industry is expected to return to glory: the company is a leader in real estate and gardening. Through channel expansion, the compound revenue growth rate from 11 to 14 reached 34.17%. The garden industry was sluggish and the real estate investment growth rate declined during the reporting period, and business scale and performance declined. However, the company has formed a complete garden industry chain with five main activities: landscape design, architectural design, garden construction, garden maintenance, and seedling cultivation, and has established long-term and stable cooperative relationships with domestic real estate leaders such as Vanke and Poly. The real estate industry is picking up at the beginning of this year, and the company's traditional garden business is expected to develop steadily. Currently, the country is vigorously implementing PPP projects, and the company's municipal garden business is also expected to expand. Environmental protection+finance, platform transformation can be expected in the future: the company lays out an “ecology+environmental protection+people's livelihood” platform, acquires Deep Blue Environmental Protection, which mainly focuses on garbage leachate and food waste treatment, and enters the field of environmental protection; invests in Kangmei Insurance, and the business is closer to the actual needs of people's livelihood. In addition, the company invested in the establishment of Pubon Financial Holdings to get involved in Internet finance to improve the capital turnover of the company and upstream suppliers; improve the partnership system to benefit employees and stimulate employee enthusiasm. It is estimated that the company's 2016 and 2017 EPS will be 0.19 and 0.21 yuan respectively, and the corresponding PE will be 36 and 32 times, respectively, giving it an “increase in holdings” rating.